The COVID-19 has impacted the United States economy in extraordinary ways. Since the start of the pandemic, the Department of Labor has recorded at least 26 million Americans filing for unemployment. One of the most common reasons for businesses to let go of employees is their inability to pay wages.
This problem shows that both businesses and the workers are deeply troubled by shutdowns happening across the country. To augment this problem, the government signed into law the Coronavirus Aid, Relief, and Economic Security or CARES Act. One of the main features of the act is the Payment Protection Program (PPP).
The program provides loans to small businesses to help them pay their wages and other expenses during the outbreak. Its primary purpose is to help keep businesses afloat and workers paid for at least eight more weeks. Businesses can loan up to 250% of their average monthly salaries without exceeding $10 million.
The Small Business Administration (SBA), however, clarifies that the program might not accommodate all businesses. Companies with adequate funds for their expenses may be disqualified to let more small businesses enjoy the benefit. This article by Ken Tysiac delves on this topic further.
SBA warns that larger companies may not qualify for PPP loans
The U.S. Small Business Administration (SBA) issued guidance Thursday reminding larger companies with adequate sources of liquidity to support ongoing operations of their responsibility to certify their eligibility for Paycheck Protection Program (PPP) loans if they apply or have applied. The SBA also issued guidance Friday in an interim final rule related to the PPP addressing promissory notes, authorizations, affiliation, and eligibility.
An example in Thursday’s guidance stated that a public company with “substantial market value and access to capital markets” should be prepared to demonstrate to the SBA the basis for its economic need certification. The guidance does not further define “substantial market value.” Click here to read more…
Being qualified is just the first step to getting your PPP loan. The next step would be applying for it correctly. You need to know crucial things such as where you can apply, how to apply, and more.
The Small Business Administration released a statement to answer some issues entrepreneurs face with the PPP. The guidance also includes the proper way business owners can compute for their PPP loan. You can read more about it with this article Ken Tysiac posted on the Journal of Accountancy last 28 April 2020.
SBA addresses how to calculate PPP loans, other issues
The U.S. Small Business Administration (SBA) issued guidance on how to calculate Paycheck Protection Program (PPP) loan amounts by business type and other issues shortly before it resumed accepting PPP applications from participating lenders Monday.
Last week’s Paycheck Protection Program and Health Care Enhancement Act, P.L. 116-139, enacted a $310 billion replenishment of the PPP program after the initial $349 billion in funding was exhausted in just 12 days. Click here to read more…
The government may also forgive your PPP loan under certain circumstances. To be eligible, you must pay your employees payroll or at least rehire them by 30 June 2020. You should also use at least 75% of your loan amount to pay for your employee wages.
These benefits show that the Payroll Protection Program may just be the helping hand all businesses need during this crisis. We at AldrisCPA can help you manage your loans to help you maximize your profits even during the pandemic. Contact our trustworthy accountants now by clicking on this link.